Online sales reach a trillion

Michael Baker

We have a voracious appetite for online shopping. Photo: Dallas Kilponen

It's official. In 2012, business-to-consumer e-commerce passed a trillion dollars US in a single year for the first time, according to a report from US-based research firm eMarketer.

Australia's share of this was US$36.2 billion.

More than 10 million people, or almost half the population, bought something online in 2012, spending an average of $3,547 per person.

What is extraordinary, though, is how much Australian consumers are 'in for a penny, in for a pound.' More than 10 million people, or almost half the population, bought something online in 2012, spending an average of US$3,547 per person. This average expenditure per online buyer is 54 per cent higher than the US and the highest in the world bar one country - the UK.

eMarketer forecasts the average for Australia will grow by 7.2 per cent to more than US$3,800 per online buyer this year.

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There are different ways you can interpret the very high online spending propensity in Australia and the UK.

First and most obviously it may reflect a relatively high level of dissatisfaction with the shopping experience in physical stores. Key elements of the shopping experience are price, availability of brands, service and visual merchandising.

Second, it may also have partly to do with the inconvenience of shopping at traditional stores in Australia and the UK. The planning fraternities in both countries did not become big and important by acting like shrinking violets. Rather, they have enjoyed fat budgets year in year out, enabling them to play extremely hands-on roles in shaping our cities and dictating tight limits on the supply and quality of retail space.

A third possible reason for the high levels of per capita online spending eMarketer reported for Australia is the amount of travelling Australians do. Since the country is geographically isolated much of the online travel spending is relatively pricey.

Should retailers with stores or shopping centre operators in Australia be particularly concerned by these ballooning e-commerce numbers?

Opinion on this question is sharply divided. On the one side are those who point to the high percentage of sales still made in stores. They think stores will be fine so long as the government keeps the playing field level by ensuring equal taxation of sales sold on- and off-line.

On the other side are a large and growing number of mainstream retailers and shopping centre operators who think they need to do more than hang back and rely on lobbying the regulators.

They realise they need to figure out fast how to connect with today’s and tomorrow’s consumers rather than yesterday’s. Beneath all the public bravado about the vibrancy of the physical store they are genuinely worried about the quality of the shopping experience they provide. Strangely though, some retailers in categories with very high e-commerce penetration, such as computer equipment, home entertainment, auto parts and furniture, are not doing an awful lot.

Australia’s so-called “bulky goods” centres are particularly exposed to these categories. These centres generally offer the most threadbare of shopping amenities, with design, construction, food catering and service among the least attractive in the industry.

The stores that populate them have justified their low-service models by claiming a price advantage that is now in many cases illusory. Such centres will need more than just cosmetic makeovers to remain viable as e-commerce options continue to multiply and consumers become ever more demanding of the shopping experience.

Operators of many mainstream shopping centres are already well aware of the danger of inaction and have a busy agenda for shoring up their futures. Numbers like those coming from eMarketer will serve as a useful reminder of how much they need to hurry up.

What do you think? Are you addicted to online shopping?

24 comments so far

It is not about being addicted. For me it is about being practical and being able to buy what I want not what is put on the large retailers shelves where I have limited choice. More and more Australian manufacturers are selling directly to the shopper as well, not only are the shoppers getting better value as in cheaper prices, most of the products are higher quality than the imported ones found on the large retailers shelves and it is delivered right to your door. And guess what the Aussie manufacturers actually make some money, so that they can employ more people and develop new products and pay some tax!!! Take socks and jocks, once you have worn quality Aussie made ones you would not be bothered with the cheap imported ones that last for just a few washes. The businesses I buy from are generally smaller operators and they actually care, and deliver great customer service, now that is a good change. The purchase may be done over the net, but I have better service than when I last bought from a large retailer.

Commenter

BuyAustralianMade

Location

Melbourne

Date and time

April 11, 2013, 11:49AM

It is not an addiction but rather a convenience. I run an online store from home seven days a week, I don't have the time to go shopping to physical stores a lot of the time, and the range and price of items I can find online is far greater than what I can find locally. This is both from Australian and international sellers.

Commenter

SR

Date and time

April 11, 2013, 3:54PM

I generally only buy clothes and groceries etc from Australian shops. The rest - books, DVDs, computer games, phones - I usually buy online. Recent example was a book I bought for $20 delivered that was around $40 here, and a new computer game from ozgames.com for $40 when $90 here.

I love to buy books and overseas sites have around 2 million titles available, many way below prices here, so I buy from there. My daughter buys all her textbooks from the UK or USA as half price - why pay $150 when you can get for $70-$80 delivered in a week or so.

I do support Australian shops if there is a small price difference, but if 30% or more then I do not bother. I long the day for bookshops to sell here at the same price I can get from overseas!

Commenter

Sparky59

Date and time

April 11, 2013, 7:14PM

I live in a small region centre in WA. There is one main shopping centre (Centro). Simply put they don't sell anything I want to buy particularly in women's fashion. And if I were to journey to the next centre further north (Rockingham) I would find that the exact same stores are tenants as the one's in Mandurah. I can walk up and down the stores and end up going home with my money still in my pocket. My other alternative is to catch a train to Perth (just short of an hour) stress it out with thousands of other shoppers and then come home exhausted! Nah - I don't think so!

Commenter

Bored

Location

Mandurah, WA

Date and time

April 11, 2013, 8:00PM

As others have said, it's convenience. I shop online because I don't have to deal with crowds, I can compare items and prices without leaving the house, without walking or driving for miles and within a couple of minutes. If one shop doesn't stock what I need it takes one click to find one that does instead of spending hours cruising round a mall trying to find it. Nearly all my shopping is from Australian retailers and I love being able to support someone working from home instead of being stuck with who can afford the rent in the local Westfield's.

Commenter

Maddy

Location

Sydney

Date and time

April 11, 2013, 9:38PM

Most people comment it’s because of the prices but I maintain it is just so less stressful and far more satisfying with the lack of other public being around, no travelling required and the simple joy of doing it three quarters naked at 2am or whenever you damn well choose to.

Commenter

Jeff

Location

Melbourne

Date and time

April 11, 2013, 9:40PM

There should be a limit like egambling

Commenter

Inspector Rex

Location

Cautious Melbourne

Date and time

April 12, 2013, 2:13AM

What a curious last sentence- to suggest addiction when the entire article talks about convenience, time, choice..hmmm. I shop for clothes online because 1. the range of goods is much greater - I can look through 10 fashion boutiques in US and UK and Europe in one sitting. I have walked through malls in Sydney and found every shop selling the same cheap Chinese made clothes and walked through trendy boutique shopping precincts to find the same stuff double the price. I find the Australian based online stores sell the same narrow range of goods.2. The goods are cheaper - partly because of the volume of their immediate markets and the goods are often cheaper but also timing: US and UK winter sales are on when I want to buy winter clothes.3. Convenience of course is a big factor - I can shop at night or early morning and I don't have the worries of parking or dealing with shop assistants and their attitude or spend time walking around looking for someone to help me (as was the case in a recent visit to a large department store).

Lobbying regulators is a waste of time - Australian retailers have to compete in the global market place as their potential market is not just Australian - but global just like everybody else online. Having a physical presence is helpful but at the end of the day we consumers want the choice and flexibility offered by online shopping - is that too much to ask from Australian retailers?

Commenter

widget

Location

Sydney

Date and time

April 12, 2013, 8:07AM

The alternative is sterile shopping centres, (Sydney) traffic, ridiculous prices. It's not an addiction it simply makes more sense on just about every level for me. People are still prepared to pay for Aussie quality - look at the continuing success of growers markets all over the place - but online shopping means often bewildering savings...

Commenter

AMT

Location

Sydney

Date and time

April 12, 2013, 8:10AM

My weekly food order, totaled over 12 months, amounts to more than that average. It's ordered online. It's not as if everyone is spending $30 billion on Blu-ray movies, designer clothes, and whatever other luxuries are out there.